WISE AND CO., INC. vs. WISE & CO., INC.

EMPLOYEES UNION-NATU AND HONORABLE

BIENVENIDO G. LAGUESMA, in his capacity as voluntary Arbitrator
G. R. No. 87672. October 13, 1989

Thesis Statement:

A petition is filed by the Wise & Co., Inc. against the Wise & Co., Inc. Employees Union-NATU
and the Voluntary Arbitrator the Honorable Bienvenido G. Laguesma to review the decision of
the said voluntary arbitrator in relation to the grant by management of profit sharing benefits to
its non-union member employees is discriminatory against its workers who are union
members.

Facts:

The management issued a memorandum circular introducing a profit sharing scheme for its
managers and supervisors. The respondent union wrote petitioner through its president asking
for participation in this scheme. This was denied by petitioner on the ground that it had to
adhere strictly to the Collective Bargaining Agreement (CBA).

In the meantime, talks were underway for early negotiation by the parties of the CBA which
was due to expire on April 30, 1988. Petitioner wrote respondent union advising the latter that
they were prepared to consider including the employees covered by the CBA in the profit
sharing scheme beginning the year 1987 provided that the ongoing negotiations were
concluded prior to December 1987.

On March 30, 1988, petitioner distributed the profit sharing benefit not only to managers and
supervisors but also to all other rank and file employees not covered by the CBA. This caused
the respondent union to file a notice of strike alleging that petitioner was guilty of unfair labor
practice because the union members were discriminated against in the grant of the profit
sharing benefits.

After a series of conciliation conferences, the parties agreed to settle the dispute through
voluntary arbitration. After the parties submitted their position papers, a rejoinder and reply, on
March 20, 1989 the voluntary arbitrator issued an award ordering petitioner to likewise extend
the benefits of the 1987 profit sharing scheme to the members of respondent union.

Issue:

WON the Voluntary Arbitrator acted with grave abuse of discretion amounting to lack or
excess in jurisdiction when he ordered the extension of profit sharing benefits to those
employees covered by the CBA despite the patent lack of factual and legal basis.

Held:

THE PETITION IS GRANTED.

The Supreme Court speaking through Justice Gancayco holds that it is the prerogative of
management to regulate, according to its discretion and judgment, all aspects of employment.
This flows from the established rule that labor law does not authorize the substitution of the
judgment of the employer in the conduct of its business.

Such management prerogative may be availed of without fear of any liability so long as it is
exercised in good faith for the advancement of the employers’ interest and not for the purpose
of defeating or circumventing the rights of employees under special laws or valid agreement
and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of
malice or spite.

The grant by petitioner of profit sharing benefits to the employees outside the “bargaining unit”
falls under the ambit of its managerial prerogative.

Hence, the award of respondent Voluntary Arbitrator dated March 20, 1989 is hereby
REVERSED AND SET ASIDE being null and void, without pronouncement as to costs.